The WTI market is going through one of its most volatile phases in years due to geopolitical tensions around the Strait of Hormuz, through which 20% of global oil and LNG supplies pass. Yesterday, prices dropped to $89 amid rumors of a U.S.–Iran deal to partially reopen the strait, although the yearly gain still stands at +65–70%.
The physical market remains tight: the EIA reports a 2.3 million barrel decline in crude inventories (as of May 1), while gasoline and distillate stocks have been falling for weeks, and Cushing inventories are also shrinking.
Geopolitics and logistics
Iran has been striking oil infrastructure in the UAE, including Fujairah (an alternative to Hormuz), increasing chaos in tanker traffic, insurance, and freight rates. The UAE left OPEC+ as of May 1, putting cartel discipline at risk given its spare capacity. OPEC+ plans to increase output by 188k bpd in June, but export security remains uncertain.
Technical outlook and analytics
WTI is behaving like a volatility-driven asset: support is around the $90 level, while the key resistance remains the psychological $100 mark. A breakout above it could push prices toward $105–110. A break below current support could lead to a move toward $85–80, but this scenario likely requires official confirmation of a “deal” by both the U.S. and Iran. Otherwise, sharp price swings driven by incoming Middle East headlines are expected to continue.
Goldman Sachs has lowered its Q2 Brent/WTI forecasts to $90/$87 on de-escalation expectations but highlights upside risks; bullish scenarios point to $110+ in case of escalation. Looking at crack spreads: gasoline is above $4.4/gal, while diesel remains in deficit ahead of summer demand.
In the article U.S. crude falls below 100 USD/bbl as U.S.-Iran talks weigh, I already noted the dependence of the oil market on the progress—or lack thereof—in negotiations between Iran and the United States.
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